Home Courts Chinese national pleads guilty to economic espionage at IBM

Chinese national pleads guilty to economic espionage at IBM

A Chinese national pleaded guilty on May 19 to economic espionage and theft of trade secrets from IBM in federal court in White Plains.

Xu Jiaqiang, 31, stole source code for the benefit of China’s National Health and Family Planning Commission, according to a superseding indictment filed last June.

The government has not identified the victim of the theft but Xu worked for International Business Machines Corp. in China and voluntarily resigned from the Armonk-based company in 2014.

He was arrested at a White Plains hotel in December 2015 after meetings with an undercover FBI agent posing as an investor in a large-data storage company.

The FBI had received a report in 2014 of someone in China claiming to have access to proprietary source code from a U.S. company. The agency set up a sting operation that took more than a year to snare Xu.

Xu, who formerly lived in Beijing, China, received a master’s degree in computer science from the University of Delaware in 2009.

He worked for IBM as a systems software developer from 2010 to 2014, according to his LinkedIn profile. The government said he had access to a company’s parallel file system, also called a clustered file system, on which the company had invested millions of dollars a year for decades.

The software is designed for large, complex systems that run on multiple servers used by scientists, governments and corporations. The networks are well suited for applications such as video on demand, digital video surveillance and seismic modeling, where users in many places need to quickly update or access files at the same time.

Companies such as IBM closely guard their source codes and allow access to a small number of employees.

The indictment does not explain how China’s National Health and Family Planning Commission, known for enforcing China’s one-child policy, is connected to Xu or how it benefited from the thefts.

Xu pleaded guilty to three counts of economic espionage and three counts of theft of a trade secret. The charges carry maximum sentences of 15 years in prison for espionage and 10 years for theft.

Sentencing is scheduled for Oct. 13.

“What Xu did was not only a federal crime,” acting U.S. Attorney Joon H. Kim said in a press release, “but a threat to our national security and the American spirit of innovation.”

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